Mises on Subsidies

mises-governmentIn Human Action Ludwig von Mises describes subsidies as the restriction of production and can be applied to Big Sugar.  Every subsidy both in production and waste disposal that Big Sugar gets hurts the people two fold.  One in limiting their savings/consumption to better the special interest while preventing more production that could happen if people were free to allocate their resources.  The second is that the cost of garbage disposal is redistributed from the polluter to the environment.

Mises on Subsidies (my highlights):

People expatiate on alleged government encouragement of production. However, government does not have the power to encourage one branch of production except by curtailing other branches. It withdraws the factors of production from those branches in which the unhampered market would employ them and directs them into other branches. It little matters what kind of administrative procedures the government resorts to for the realization of this effect. It may subsidize openly or disguise the subsidy in enacting tariffs and thus forcing its subjects to defray the costs. What alone counts is the fact that people are forced to forego some satisfactions which they value more highly and are compensated only by satisfactions which they value less. At the bottom of the interventionist argument there is always the idea that the government or the state is an entity outside and above the social process of production, that it owns something which is not derived from taxing its subjects, and that it can spend this mythical something for definite purposes. This is the Santa Claus fable raised by Lord Keynes to the dignity of an economic doctrine and enthusiastically endorsed by all those who expect personal advantage from government spending. As against these popular fallacies there is need to emphasize the truism that a government can spend or invest only what it takes away from its citizens and that its additional spending and investment curtails the citizens’ spending and investment to the full extent of its quantity.

While government has no power to make people more prosperous by interference with business, it certainly does have the power to make them less satisfied by restriction of production.

via XXIX. RESTRICTION OF PRODUCTION: The Nature of Restriction.

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